A student walks out of the Missouri State University bookstore on Tuesday, March 26, 2013. / Nathan Papes/News-Leader

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An internal audit of the Missouri State University bookstore released Tuesday paints a picture of a system rife with opportunities for embezzlement and a former director who spent years protecting and expanding his criminal opportunities.

Not only did former director Mark Brixey steal from the university, according to the audit, he also apparently stole from Follett Educational Services, which sells textbooks.

The audit states that Brixey appears to have taken used textbooks, already sold to Follett and set aside for shipment, and removed books from the order and sold them again to other companies.

The audit estimates Follett’s loss at $264,290. Follett did not report the shortages, according to the audit.

In addition, in May 2011, Brixey told Follett representatives he preferred that the bookstore be paid in cash because, he explained, cash was needed for book buy-backs and for bookstore funding, according to the audit. The company complied, although it did require him to sign documentation kept by Follett.

A former bookstore employee told MSU auditors that on March 2, 2011, the bookstore received a check in the mail from a textbook company. Brixey was out of the office. According to the audit, the former employee emailed Brixey: “We received a check from Follett for reimbursement for postcard mailing. Do you want me to send it to Financial Services for deposit in our postage account?”

Brixey responded: “How much is the check?”

She told him $1,977.98.

According to the audit, Brixey replied: “Please hold off on processing it for now, if you would just put it in the safe until I get back ... I will take care of it then.”

That check, according to the audit, was one of 144 transactions over 10 years (including cash) in which Brixey embezzled.

A major shortcoming in the bookstore’s checks and balances was that Brixey held the positions of both textbook manager and bookstore director. He had been the textbook manager when promoted to director in October 2000. He chose not to hire someone to fill his former post.

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Those two positions are now segregated, according to June McHaney, MSU’s auditor.

Another hole, acknowledged in the audit, is that the University’s Bursar’s Office, which functions as the university’s cashier, allowed Brixey to cash checks worth thousands of dollars that were made out to the university.

For at least 20 years — before Brixey became bookstore director — the bookstore director had been allowed to cash checks from Follet at the Bursar’s Office for end-of-semester book buy backs, when cash is needed.

But Brixey over the years and without approval of a superior, extended that single, unwritten exemption. He started to cash checks he received not only for Follett’s book buy-back, but from two other textbook vendors: Nebraska Book Company and Missouri Book Systems.

What this meant, according to the audit, is that Brixey avoided the normal detections that occur when checks are directly deposited to the university and he avoided any point-of-sale checks and balances that occur when a transaction is rung up on a cash register.

McHaney said that since the embezzlement came to light, MSU has clamped down on policies at the Bursar’s Office.

The audit states (with underlining included): “Ensuring that all checks payable to Missouri State University or Missouri State University Bookstore are properly deposited and accounted for is a critical preventative internal control within the Bursar’s Office, and should have been in place. The above unwritten policy exception has been terminated.”

McHaney said Tuesday that the Bursar’s Office is undergoing an internal audit.

“We had it on the schedule,” McHaney said. But she and MSU President Clif Smart moved it up on that schedule.

Thus far, McHaney said, it appears only Brixey has stolen funds by cashing university checks at the Bursar’s Office.

Another lapse, according to the audit, is that Brixey stole $264,290 from the MSU Athletics Department because no one was checking a book buyback program for athletes.

The audit states that in 2012 the department added the post of Athletics Office Business manager. The person in the new position in 2012 inquired about $52,966 due from the bookstore. Brixey immediately transferred the funds, according to the audit. But the athletics department received nothing from 2006 to 2012, according to the audit.

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The money will be returned, the audit states, when Brixey makes restitution.

In an effort to further tighten controls, the university is currently considering a new position. The position would provide financial oversight to several ancillary university operations, such as the bookstore, Res-Life and the Taylor Health Center. Currently, the bookstore director is overseen by the vice president for student affairs, an office that does not have a budget officer.

In addition, MSU’s general counsel has proposed a more rigid book buyback policy for the university — one with contracts. The audit states: “There were no written agreements that specified the fees, terms, conditions and method of payment. In the past, the bookstore did not utilize written agreements with textbook companies, as Missouri law does not require it.”

Brixey was ultimately caught by MSU auditors. According to the audit, Brixey was on vacation in August. He was asked about a check that appeared to be missing.

According to the audit, Brixey responded: “I haven’t rang it up yet ... I was waiting for a slow sales week to do so.”

2007 audit noted bookstore discrepancies

Mark Brixey’s embezzlement is not the first time the MSU bookstore has been mentioned in an internal audit. Back in 2007, an internal audit revealed that $6,336 was missing. The 2007 audit detailed several shortcomings in operations, stating that “cash access and controls at the bookstore are very poor.” For example, eight different employees had access to a safe in the back of the store, and employees were not logging cash withdrawals from the safe as they were supposed to do. In 2007, it was Brixey who contacted Springfield police. Police reviewed the audit and concluded it would be fruitless to try to determine who, if anyone, took the money. In the 2007 audit, McHaney wrote: “It is recognized that the amount of $6,366 may appear immaterial compared to the bookstore’s revenues of over $11 million. However, had adequate controls been in place, this loss could have been prevented or detected timely. Therefore, it is important that bookstore management implement and monitor critical controls regularly.”